Last week ShopKick introduced "shopBeacon," which uses Bluetooth low energy (BLE) indoor positioning technology. The company is testing it with Macy's, which has also independently been using indoor location for some time (mainly leveraging WiFi) to enhance its in-store app experience for customers. (See ShopKick demo video.)
ShopKick's adoption of iBeacon is an important move to insert the company back into the in-store shopping conversation. It had been an early pioneer in mobile loyalty, seeking to help retailers drive consumers into stores. But as indoor location has gained momentum ShopKick has largely been on the sidelines -- until now.
ShopKick has a wide range of brands and national retail partners, including Target, BestBuy, Sports Authority and JCPenneys. The company seeks to serve retailers but also "own the customer relationship." Accordingly there's some tension between working with ShopKick and providing a direct indoor-location experience, as Macy's does through its app.
A less-well-known company seeking to do something very similar for retailers is Swirl. Swirl has both a consumer-facing multi-retailer app but also powers the indoor experience for retailer apps through an SDK. Timberland is the company's best-known partner. ShopKick is now also an indoor-location enabler with its shopBeacon BLE beacons.
Apple itself is going to implement iBeacon in its own stores. There are a range of obvious and secondary use cases, including providing enhanced product information and notifications about Genius Bar appointments. Beyond an improved in-store experience, Apple hopes to boost sales through iBeacon. The product can also be used to support in-store mobile payments (see, PayPal Beacon).
It's well established that a majority of consumers have used smartphones in store for research purposes and many are interested in indoor/in-store information. However recent research from ISACA suggests that retailers will need to be judicious about how they use in-store notifications and personalization and not become too "pushy" in trying to upsell and cross-sell consumers.
Another challenge of sorts for retailers with indoor location is the fact that majorities of smartphone shoppers use retailer mobile websites. Indoor-location features are much harder to deliver via websites. Smaller numbers of consumers use retailer apps. This makes sense because apps are typically downloaded and used by a store's most loyal customers, which represent a minority of overall store shoppers.
According to NPD survey data, 71% of smartphone owners access retail websites but only 57% use apps. Many of those apps fall into disuse shortly after they're downloaded. In addition, the survey found that a majority of smartphone shopping-related research was done at home and not on the go, suggesting "that engagement on their smartphone is more of an alternative for online shopping rather than a showrooming tool."
Accordingly in-store information directed at enhancing the customer experience is a way to make apps more relevant and engaging. But as the ISACA study indicates retailers (or mall and venue owners) will need to develop information, content and indoor experiences for customers that are informational and not merely about trying to sell things.
This is a complicated arena for retailers and would-be providers of indoor location and marketing. Experimentation and testing are necessary to determine what's going to "work" for consumers, vendors and venue owners. Macy's is very smart and to be applauded for "getting out in front" of the issue and trying things, notwithstanding the potential exposure to "indoor surveillance" criticisms.
Earlier this afternoon comScore reported its September US smartphone market share numbers. Nielsen has said that 64% of US adults now carry smartphones; however comScore asserts the number is 62%.
Android continues to be the dominant operating system, followed by the iPhone. However Android lost some ground this month though Samsung gained share. All the other Android OEMs are basically a diminishing sideshow to Samsung.
Microsoft also saw a small bump for Windows Phones. It has had considerable success in Europe because of the continuing strength of the Nokia brand but little success to date in the US market. Perhaps that will improve as BlackBerry users are forced to change platforms as they upgrade.
The numbers above probably still do not reflect sales of the iPhone 5s and 5c, which went on sale on September 20 in the US. The October figures should better reflect the iPhone 5s/c impact on the market.
Perhaps most interesting is the data about leading mobile apps and web properties. Overall Google has the greatest mobile reach, although Facebook continues to have the single most popular app. This is very analogous to the iPhone and Android, where Facebook is like the iPhone in this example.
Google Maps saw some unexpected loss of usage and reach vs. last month, dropping from the fifth most popular app to eighth position.
The iPad Air officially became available around the world today. Supplies appear to be readily available in the US but have slipped in some international markets. In the US the 128GB T-Mobile version now has a 5 - 10 business day wait. (Update: New York is reportedly selling out of some models.)
The new iPad Retina Mini will become available "later in November." There are undoutedly many people trying to decide which one to buy (iPad Air vs. iPad Mini Retina).
Beyond the iPad there are the Nexus 7, Kindle HD tablets and Samsung's Galaxy Tabs. The best of that group remains the Nexus 7. However the Nexus 7 is not as polished or quite as good as the new iPads, though it is cheaper. And lower cost is a meaningful factor for many people.
These three makers form a middle tier of price and quality after the iPad.
However, at the bottom, there are scores of "no-name" Android devices selling for less than $150. Many (as in the graphic above) are selling for under $100.
These super-cheap tablets are likely to have battery life and performance issues. They're not going to last little more than about a year if that (my original Nexus 7 broke twice in the same year with eventual total screen failure). Still, low pricing will make them very attractive to some. Indeed the prices are so low in some of these cases they can even be treated as disposable.
These low-end Android tablets will undoubtedly boost Android's share of the market. In the US the iPad still is responsible for more than 80% of tablet-generated web traffic. We'll have to revisit those data in Q1 2014.
There are a couple of ways to see the potential impact of the proliferation of low-end Android tablets. They're not mutually exclusive 1) they will take share from the iPad and 2) they will expand the market for tablets to more price-sensitive groups who otherwise wouldn't pay a premium for an iPad.
Regardless, the tablet explosion is not going to be good news for Q4 PC sales. People are likely to avoid replacing or buying new PCs in favor of smartphones and tablets.
Earlier today Apple announced quarterly earnings. Gross revenue was $37.5 billion vs. $35.9 billion last year. The company generally beat expectations on revenue, earnings per share and iPhone sales. Mac sales were in line with expectations. However, iPad unit sales came in slightly lower than anticipated.
Here are the top-line figures from the release:
Regionally Americas sales rose only 1% year over year. Europe was flat. China was up 6% and Japan was up 41%. Here are the revenue numbers by product:
According to Localytics the following is the global breakdown of iPhones in market:
Paid search marketing firm The Search Agency released its Q3 "State of Paid Search Report" for the US market. The report is based on a large volume of client data and discusses paid search trends by search engine and several industry segments. The headline is that a third of Google's paid search clicks in the US are now coming from smartphones and tablets.
The following are some of top-level data released in the report:
The following charts show the percentage of paid-search clicks by device category.
In the aggregate, Google saw 33% of paid clicks in Q3 coming from smartphones and tablets, with the greatest growth coming from tablets. Bing saw about 18% from mobile devices, since it has a much smaller and less visible mobile presence.
The third quarter US PC shipments figures have been coming out. While there was a mild recovery for some of the PC makers, the numbers overall remain very weak.
Both IDC and Gartner see PC shipments off from 7.6% to 8.6% overall vs. last year. In addition shipments don't equal sales. Consequently the actual sales figures may be weaker than suggested by the shipments numbers.
The market has structurally changed. Smartphone and tablet usage has replaced PC usage in many cases. Smartphone and tablet growth will continue to gain for the next 3 - 5 years, generally at the expense of PCs. We're also not likely to ever see high-end ($1,000+) PC sales at any volume in the consumer market again.
While Apple has been able to maintain higher desktop and laptop prices, most PCs now sell at sub-$500 levels (they're effectively disposable). And once consumers make that leap psychologically they'll want to spend even less (hello Chromebooks).
There's also less and less urgency to replace or upgrade older PCs. Consumer indifference to Windows 8 also compounds challenges for the PC industry.
The "aha" about the Q3 Gartner and IDC PC shipments estimates above and below are that the back-to-school shopping season did almost nothing to boost sales. HP, Lenovo and Dell saw modest growth while other PC makers saw significant double-digit declines.
Meanwhile tablet (and hybrid phone-tablet) devices continue to grow. Roughly 34% of the adult US population now own tablet devices according to earlier 2013 Pew survey data. Those numbers are likely to be above 40% and perhaps as high as 45% after Q4 2013.
The thing separating the PC from more precipitous declines is arguably Microsoft Office. If a functioning version of Office comes to non-MSFT tablets or if the cloud based version of Office is more widely adopted, PCs will be even less "necessary" for consumers than they are today.
In the frenzy of speculation leading up to Apple's iPhone announcement last month, there was lots of discussion of smartwatches. Apple supposedly was developing an "iWatch" and would be announcing it along with the new handsets. Samsung, wanting to beat Apple to market, rushed out its Galaxy Gear watch, which has met with scathing reviews as an "unfinished product."
Google was also rumored to be working on a smartwatch. The 9to5 Google site has some additional information on the potential release of a Google smartwatch at the end of this month: "Details are slim but the person seemed to think that Google Now functionality would be at the center of the product."
The idea is that Google would take its technology and learning (thus far) from Google Glass and put that in a watch. The emphasis on Google Now is interesting and appropriate -- the watch as a kind of notifications center. Samsung tried to cram too much half-baked functionality into Galaxy Gear.
There's considerable consumer interest in smartwatches (much more than Google Glass). Just over 40% of survey respondents in a recent survey we conducted (n=1,024 US smartphone owners) said they were interested in a smartwatch. Not surprisingly respondents were most interested in smartwatches that were made by the same maker as their current smartphones.
The right mix of features and pricing are key here. Undoubtedly Apple will develop an "iWatch." And Google, as the rumor suggests, will probably roll out a watch itself, given its new commitment to "wearables." But these initial products may not get the mix right: simplicity, aesthetics, functionality and cost.
The optimal price is probably $99 to $199. But $299 would be OK if the watch were a great product. At $299 and above, the Galaxy Gear is simply to flawed and too expensive for what it delivers. Now we'll see what Google can come up with.
Place 2013 brought together the entire spectrum of companies building the indoor location ecosystem. Retailers, technology vendors, mobile developers, data providers, advertisers, agencies, and investors attended this unique, one-day event at the Palace Hotel in San Francisco and was the first-of-its-kind anywhere.
8:45 AM - 9:00 AM
The Consumer Foundations of Place-Based Marketing - The majority of smartphone owners are already using their devices in stores to find product and price information, as well as coupons. Opus Research will present proprietary findings on in-store behavior, privacy attitudes and consumer receptiveness to indoor promotions.
Speaker: Greg Sterling, Senior Analyst, Opus Research
View slides from this presentation
9:00 AM - 9:45 AM
The State of Indoor Location - For the past several years online mapping giants and technology providers have been laying the groundwork for indoor location. What is the current state of the infrastructure? What technologies are already deployed and how accurate are they? What indoor consumer and advertiser scenarios are possible today and what might be possible within three years?
Joseph Leigh, Head of Venue Maps, Nokia
Leslie Presutti, Mobile, Location and Computing Business Unit, Qualcomm Atheros
Zack Sterngold, VP of Americas, Boingo Wireless
Avinash Joshi, Chief Technologist, Wireless LAN Group, Motorola Solutions
9:45 AM - 10:25 AM
Keynote: Why Indoor Location Will Be Bigger than GPS or Maps - The explosion of smartphones with built-in sensors, accelerometers, GPS and WiFi is making indoor positioning not only possible but also inevitable. The emerging indoor opportunity for venue owners, retailers and technology providers is potentially massive. Google’s Don Dodge, an investor and close observer of the space, will explain why he believes indoor location and marketing is going to be huge and potentially larger than GPS and maps.
Speaker: Don Dodge, Developer Advocate, Google
10:45 AM - 11:05 AM
Case Study: Point Inside - Point Inside was one of the early consumer-facing apps in the indoor location space. The company has since shifted its focus to enterprises and enabling retailers to take advantage of indoor location. The company will present a new case study featuring a major home-improvement retailer.
Speaker:Todd Sherman, Chief Marketing Officer, Point Inside
View slides from this presentation
11:05 AM - 11:30 AM
Featured Case Study: Forest City and Path Intelligence - Forest City Enterprises are many years into using mobile device monitoring and advanced indoor analytics to help create a better environment for their shoppers and their retailers. Hear from the project sponsor and partner Path Intelligence on how they have transformed asset management, leasing, and marketing.
Stephanie Shriver-Engdahl, VP, Digital Strategy, Forest City
Cyrus Gilbert-Rolfe, VP, Path Intelligence
View slides from this presentation
11:30 AM - 12:15 PM
Digital Analytics for the Real World - Using a variety of technologies to identify when and where smartphone shoppers are in stores, retailers can now leverage "big data" previously reserved for Internet companies alone. These "real world analytics" hold profound implications for everything from in-store merchandising and staffing to consumer marketing. Leaders in the segment will offer views on opportunities and potential pitfalls for indoor analytics.
Jon Rosen, Executive Vice President, iInside
Will Smith, CEO, Euclid
Alexei Agratchev, Co-Founder, RetailNext
Michael Healander, General Manager, GISi Indoors
1:15 PM - 1:55 PM
Retail Spotlight: Aisle411 & Dick's Sporting Goods - Aisle411 will discuss current retail deployments and their impact on operations, consumer loyalty and marketing. Dick’s Sporting Goods will share how it’s thinking about indoor location, privacy issues and the overall opportunity. And Bob Rosenblatt, former COO of Tommy Hilfiger Group, will outline the intriguing business opportunities for retailers in develop- ing indoor marketing strategies.
Nathan Pettyjohn, Founder & CEO, aisle411
Rafeh Massod, VP, Customer Innovation Technology, Dick's Sporting Goods
Bob Rosenblatt, CEO, Rosenblatt Consulting
View slides from this session
1:55 PM - 2:15 PM
Using Store Visits and Data for Advanced Retail Intelligence - Online to offline has been the dominant but largely invisible paradigm of Internet-driven spending. Using mobile to better target and influence store visits is only the beginning. PlaceIQ CEO Duncan McCall will offer a major retail case study fo- cused on measuring store visits after mobile ad exposures. He will also discuss how to connect online, nearby and indoors for a more complete picture of the customer journey.
Speaker:Duncan McCall, Co-Founder & CEO, PlaceIQ
View slides from this presentation
2:15 PM - 3:00 PM
Ad-Tracking to the Point of Sale - Panelists will discuss the current and future use of indoor location as a way to demonstrate ROI and sales lift on a per- campaign basis. What is the current state of the art in matching store visits to ad exposures? And what are the broader implications of connecting online ads and offline data?
Monica Ho, Vice President of Marketing, xAd
David Shim, Founder & CEO, Placed
Ameet Ranadive, Director of Product, Twitter Ads Team
Michael Shevach, SVP Ad Solutions, Retailigence
Duncan McCall, Co-Founder & CEO, PlaceIQ (moderator)
3:20 PM - 3:50 PM
Opt-in or Opt-out: Indoor Location & Consumer Privacy - Indoor location has already gained the attention of members of Congress and been called "troubling." While not everyone agrees about the level of concern, there are obvious consumer privacy issues raised by in-venue smartphone tracking. How should the companies be addressing these issues today and what might regulation require tomorrow?
Jennifer King, School of Information, UC Berkeley
Jules Polonetsky, Executive Director & Co-chairman, Future of Privacy Forum
3:50 PM - 4:10 PM
Case Study: Meridian/Aruba Networks - Meridian, who was recently acquired by Aruba Networks, will offer two indoor case studies, one involving a small business (Powell’s Books in Portland) and another involving a major U.S. apparel and housewares retailer.
Speaker: Jeff Hardison, Vice President, Meridian
View slides from this presentation
4:10 PM - 4:55 PM
Microfencing: Targeting In-Aisle Shoppers - Billions of dollars are spent each year by brands and manufacturers trying to influence consumer buying in stores. A percentage of that money will migrate to indoor digital marketing. What conditions must first exist and what will those brand-consumer interactions look like? The panel will explore these questions as well as the contours of the broader indoor marketing experience.
Neg Norton, President, Local Search Association Ben Smith, CEO, Wanderful Media
Melissa Tait, VP of Technology, Primacy
Erik McMillan, CEO, BrickTrends
Asif Khan, Founder, Location Based Marketing Association (moderator)
4:55 PM - 5:30 PM
Reality Check: Assessing the Indoor Opportunity - The other sessions explored major opportunities (and challenges) of indoor location and marketing. Now it’s time for a fun, yet sober assessment of whether and how soon these scenarios will come to pass. Is there real demand and who will own the “indoor channel”? Where will the "place-based market" be next year, in three years?
Jeremy Lockhorn,VP, Emerging Media, Razorfish
John Gardner, Partner, Nokia Growth Partners
Chandu Thota, Engineering, Google
Wibe Wagemans, IndoorAtlas
Apple announced this morning that it had sold more than 9 million iPhone 5s and 5c devices this past weekend. It did not indicate how many of the 9 million were 5c devices vs. 5s devices. Most of the demand globally is likely to have been for the 5s. That's what our survey showed (see below).
The market became very nervous after the 5c went on sale for pre-orders a week ago and Apple didn't issue a press release last Monday. Many institutional investors sold Apple shares. Then the very postive 5s reviews came out stoking consumer demand.
Here's what Apple said in its release this morning:
Apple today announced it has sold a record-breaking nine million new iPhone 5s and iPhone 5c models, just three days after the launch of the new iPhones on September 20. In addition, more than 200 million iOS devices are now running the completely redesigned iOS 7, making it the fastest software upgrade in history.
Essentially the 5s sold out of its initial supply.
Source: Opus Research, n=1,508 US adults (Sept 16 – 19 2013)
Last year Apple said it had sold 5 million iPhones during its first weekend. That was a record at the time. This nearly doubles it. The company also announced this morning that since iOS7 became available late last week, 200 million devices around the world have been upgraded.
I was concerned that I would dislike or be ambivalent about the new OS. However I actually like it quite a bit.
The iPhone 5s sellout will only fuel further demand for the device. Supplies of the 5c remain available. But the public seems to recognize the 5c as "last year's model" with a new coat of paint. While that's not entirely true (there are some upgrades) demand for the 5c has been much less than the 5s as our survey last week predicted.
Update: Localytics now answers the 5s vs. 5c sales question, saying that the 5s outsold the other device by a factor of more than 3X in the US and an even larger margin outside the US:
As I wrote last week the advent of iBeacon and bluetooth low energy may effectively mean that NFC as an in-store mobile payments standard in the US market is dead. Google Wallet had placed a big bet on NFC payments but has been thwarted in its bid for adoption by two principal factors:
Google Wallet 1.0 thus was a failure. Google is now out with a new Android version (and soon iOS) is making a renewed bid for consumer adoption with a range of new features and a partial move away from NFC. In-store payments still depend on NFC and so won't be happening at scale any time soon for the same reasons cited above.
However the new features add utility and breadth to the user experience. Here's what's new:
Exactly a year ago we surveyed 1,501 US adults and found the vast majority were not interested in the idea of mobile wallets: 71% said "I'm not at all interested . . . in using [my] mobile phone to pay for things and replace cash or credit cards." Another 15% said they had only "limited interest." Only 14% had some interest or significant interest.
In specific contexts, where consumers see the tangible benefits of mobile wallets, these numbers change. But in the abstract the public remains largely uninterested in mobile wallets.
Nokia's Lumia handsets represent about 80% of Windows Phone's sales. However Nokia was continuing to lose share to Android and iPhone in key markets across the globe. By the same token Windows Phones had failed to enable Nokia to re-enter the US smartphone market in any convincing way.
Since the inception of the Microsoft-Nokia deal in early 2011, we had been arguing it was a serious mistake for Nokia to not offer an Android phone. However the terms of the agreement between the companies precluded that. In 2014 the deal was set to expire. But before that deal was renegotiated, Microsoft acquired Nokia's phone hardware business for roughly $7.2 billion.
In the middle of last year we speculated that Microsoft might be compelled to acquire Nokia for defensive reasons. When the acquisition was announced a little over a week ago, I argued had Nokia embraced Android it would not have been so weakened and forced to sell itself. I also speculated this summer that Nokia would be compelled to come out with Android handsets if it wanted to survive:
My view is that Nokia will be compelled -- notwithstanding contractual exclusivity with Microsoft -- to adopt Android at some point in the not-too-distant future or remain stuck in what amounts to neutral.
Now the NY Times is reporting that Android Lumia phones were in development:
A team within Nokia had Android up and running on the company’s Lumia handsets well before Microsoft and Nokia began negotiating Microsoft’s $7.2 billion acquisition of Nokia’s mobile phone and services business, according to two people briefed on the effort who declined to be identified because the project was confidential. Microsoft executives were aware of the existence of the project, these people said.
There are two overlapping potential scenarios: Nokia was developing Android handsets in part to add leverage in negotiations with Microsoft (for renewal or acquisition); and/or Nokia was developing Android handsets in earnest and would have rolled them out -- forcing Microsoft to avoid that outcome through an acquisition.
Regardless it appears that the idea of Nokia marketing both Android and Windows Phones was a potential disaster that Microsoft sought to avoid at great cost -- literally. As I've written elsehwere, however, it remains unclear that Microsoft's $7.2 billion have been well spent.
The Apple iPhone event just concluded. Everything that was announced at the event had been leaked or written about beforehand, including:
However that last item, the "Touch ID" fingerprint sensor, was the stand-out announcement in my view. It will enable users to both unlock their phones and confirm iTunes purchases instead of entering a password:
Put your finger on the Home button, and just like that your iPhone unlocks. Your fingerprint can also approve purchases from iTunes or the App Store.
What I mean by the headline is that Touch ID is to the 5S what Siri was to the 4S: a kind of "wow" feature that helps it stand out from other smartphones. It partly compensates for the fact that Apple didn't introduce a larger screen, which everyone now wants. That's coming with the iPhone 6.
Apple's iPhone launch event is confirmed for September 10. It will take place at Apple's HQ in Cupertino, California. The company is expected to announce multiple devices at the event, including a new iPhone 5S, potentially an iPhone 5C and possibly an iWatch wearable device. There may also be new iPads.
The iPhone 5C is real and may come in a variety of colors (5 is the rumor) -- hence the colorful bubbles in the invitation. The forthcoming 5S is supposed to come in a champagne or gold in addition to traditional black and white. Pricing of these devices is uncertain, though the 5S will likely follow past pricing ($199 with 2-year contract, etc.).
Some reports have suggested the 5C will cost between $400 and $500 unlocked. Carrier subsidy pricing is TBD. The real question surrounding the 5C is how appealing will it be? How "good" wil it be?
Apple is walking a tightrope.
The 5C is intended to make Apple more competitive in developing markets and at the "lower end" of the market where there's more price sensitivity. If the phone is "good enough" and cheap enough -- does the "C" stand for "cheap" or "China" or "color"? -- it could potentially cannibalize sales of the 5S. But if the phone is not of sufficiently high quality it will fail and Apple's brand will suffer.
I suspect that Apple will include a previous-generation chip in the 5C (perhaps the current 5 chip), whereas the 5S will get a new more powerful processor. There may also be memory limitations with the 5C. However the apps and app ecosystem should be the same.
The primary differentiators will thus likely be price, color, materials (plastic) and processing power/speed. But how does Apple build an attractive product that is competitive but doesn't overshadow its more profitable flagship product? That's the dilemma.
Kantar Worldpanel ComTech reports that Windows Phone has made gains across major EU markets and now stands as the solid #3 platform behind Android and Apple. Windows Phone success in Europe is largely due to its association with Nokia, which remains a strong brand in Europe.
Germany, UK, France and Italy are Windows Phones' strongest markets. Gains in those countries helped elevate the Microsoft OS's share of the smartphone market in the "EU5" to 8.2%, up from 4.9% a year ago. That's an impressive gain. Mexico and Australia are also big markets for Windows Phones, according to Kantar.
Here are a comparison of the Kantar smartphone market-share data for the US, China and EU5 markets:
As indicated above, Kantar says that Windows Phone has a 3.5% share in the US. However, comScore shows a smaller gain and share (as of June 2013):
The Kantar data show a significant loss of share in the US for Android -- nearly 8%. Given this I'm skeptical that the data are truly reflective of the broader US market. However Kantar boasts that its panel is the largest and its data are the most accurate in the industry.
In Europe, BlackBerry and Symbian have lost a combined 7.4%. That's more than the gains enjoyed by Windows Phones. Accordingly the question arises: to what extent are those defecting BlackBerry, Symbian and "other" adopting Windows Phones? The Kantar data strongly imply that's where Windows Phones' EU gains are coming from.
Last year Google brought in ad revenues of $43.7 billion. This year, thus far, the company has made roughly $24 billion. For the full year 2013 Google is likely to earn $50 billion in advertising revenue. That may be a low projection, however.
EMarketer today released some estimates on the breakdown of PC vs. mobile and search vs. display revenues for Google. According to the estimates, search will generate 82% of Google's overall revenue this year with just under 20% of search revenue coming from mobile.
By comparison 2% of display ad revenue will come from mobile.
Over time the data aggregator sees more than 40% of Google's total ad revenues coming from mobile (search + display).
Let's look at what these breakdowns (if accurate) would mean in real terms, assuming $50 billion in total projected ad revenue for 2013:
The other way to view those revenues is the following:
If the standard US (45%) vs. international (55%) ad revenue distribution holds for mobile then the following will be the rough figures for Google mobile ad revenue by geography (approximately):
Despite the above, Google's US mobile ad revenue is likely to be somewhat stronger than its mobile revenues from outside the US. Accordingly I would probably flip those percentage figures when it came to mobile.
Last year the IAB reported that mobile ad revenue in the US was $3.4 billion. This year it's likely to hit $7 billion according to our estimates. If that's correct then the Google figure above is too aggressive.
Given that Jumptap has now sold itself to Millennial Media it's not clear whether we'll get many more of the company's monthly Mobile STAT reports. The August report focuses on device market share by traffic on the Jumptap network.
It's interesting to contrast the Jumptap traffic figures with survey based market-share data from comScore. First the Jumptap numbers:
Jumptap sees Apple devices (iPhone + iPod Touch) generating 56.8% of smartphone traffic on its network. Collectively Android devices are responsible for roughly 35% of traffic according to the slide above.
By comparison comScore (based on consumer survey data) says that Android has a US smartphone market share of 52% vs 40% for Apple -- almost the reverse of the Jumptap numbers. Millennial ad network data are more consistent with the comScore figures below.
The tablet traffic data provided by Jumptap show the iPad remains well ahead of other competing devices, though the Galaxy Tab and Nexus 7 have grown since last year. The "headline" from the chart below is the dramatic decline in Amazon Kindle traffic in the past 12 months.
Compare tablet traffic data from Chitika, another mobile ad network. It shows an even greater margin (June 2013) between the iPad and its rivals.
Finally Jumptap reflects the relative traffic split between the mobile web and apps. The Jumptap data show that ad requests from apps now generate 84% of the traffic it sees vs. 16% from the mobile web. This is consistent with data from both Nielsen and comScore that show a roughly 80-20 split between apps and mobile web traffic in favor of apps.
However 2012 survey data from Nielsen, xAd, Telmetrics reflect differing levels of app usage by category. And in retail the mobile web is used more than apps as a general matter. So despite app dominance in the aggregate, in particular verticals the story may be quite different and much more nuanced.
Android's share (of smartphone shipments) across the globe is gaining momentum according to the latest IDC numbers. By contrast there's evidence that Android's US share may have "peaked" according to analysis from Asymco's Horace Dediu.
Below are IDC's estimates showing global market share for Q2 by shipments:
Thus Android stands near 80% of global smartphone shipments, which aren't identical with sales. But it's a directional indication of actual sales.
However in the US market the story is different; Android's share is flat (per comScore):
Dediu points out that over the past six to eight months in the US the iPhone has gained more usage than Android (11M vs. 6.6M users). So it would appear that Apple's US and international fortunes have significantly diverged.
However we also have research from CIRP, which finds (via survey data) that "first time smartphone buyers" in the US (meaning those buying smartphones for the first time now) tend to be older and more price sensitive. They buy "secondary Android brands" (e.g., LG) and keep their phones longer.
Apple's strategy for more price-sensitive consumers has been the iPhone 4 and 4S, which has been reasonably successful to date. However rumors suggest a low-cost "plastic" iPhone for emerging markets and more price-conscious consumers.
When looked at in the context of overall computer operating systems (including the PC), Android will be the dominant OS by 2015 on a global basis -- far outstripping Windows. By comparision, Apple's overall OS share (iOS + Mac OS) is expected to nearly match Windows.
There are a number of interesting things about Googlerola's just-released Moto X. First, it emphasizes design over specs. The latter had always been the hallmark of Motorola's previous Android ("Droid") phones. The new phone also allows for an unprecedented degree of customization:
In fact, the way the phone is presented on the Motorola site makes it effectively into a fashion accessory. However that's how many people do treat their smartphones today. The customization, which is smart, is apparently made possible because the phone is manufactured in Texas (rather than China).
But beyond those things, the phone can be activated or invoked without touching it. Users can speak commands to the phone and get responses or create reminders, set alarms and so on. Like Google Glass, Google Now can be initiated with a "wake up" phrase: "OK Google Now." This effectively turns the entire phone into a personal assistant. The TV spot linked below demonstrates this positioning and the functionality in action.
Previously Google Now and voice actions on Android devices had to be initiated by touching the screen: swiping up or touching the microphone icon. That's not required here (I haven't had a chance to use the device). Google/Motorola are using this "always ready" assistant capability to make the device stand out from both the iPhone and other Android devices. Below is one of the new TV commercials for the Moto X, which showcases how Google Now is now being "personified" -- much more like Siri than in the past.
Moto X is priced at $199 with a two-year carrier contract in the US. There will be a Google Play edition but there's no word at this point on unlocked pricing.
Apple just reported a $35.3 billion quarter, which was somewhat better than a year ago and beat financial analyst expectations -- largely on the strength of iPhone sales. The company also announced profit was $6.9 billion (vs. $8.8 billion a year ago). Sales outside North America accounted for 57% of revenue.
The company sold 31.2 million iPhones (vs. 26 million a year ago). But it sold fewer iPads than expected:14.6 million. Mac sales were down but Macs outperformed the PC industry as a whole, which is slumping badly.
Below are two charts that show the distribution of revenues by segment/geography and by product line (figures in $billions):
Unit sales of iPads were a concern for many financial analysts. The company sold 14.6 million tablet devices compared with 17 million last year and more than 19 million last quarter. While this implies market share erosion or shift away from the iPad, today Chitika released data showing that in North America at least, the iPad's web traffic share had grown since April and now stands at just over 84%.
While Apple continues to generate huge quarterly revenues growth has slowed or declined in some cases. Accordingly there's enormous pressure from investors to bring out new products or create new product categories: TV, wearables, etc. On the earnings call Apple CFO Peter Oppenheimer said, “We are on track to have a very busy fall" though he wouldn't elaborate.
New iPads and iPhones are expected to be introduced. There may even be "surprise" products such as the rumored iWatch.
As the global market for smartphones matures, it is clear that the default keyboard platform is going to be key for product differentiation. That's why it is so interesting that up-and-coming Chinese OEM, TCL Communications Technology Holdings Ltd, has expanded its licensing agreement with Nuance, making Swype the default keyboard for its line of Android-based smartphones sold in the U.S. In its latest report of device shipments, TCL claims sales volume of smartphones grew 126% in June, when compared to the same month last year, exceeding 1.3 million units. Of the nearly 21 million phones sold globally in the first six months of 2013, over 18 million were sold outside the Chinese domestic market. 4.3 million were smartphones, selling under the he Alcatel OneTouch brand as well as TCL's own Idol X branding.
Like Samsung, TCL is a well-diversified consumer electronics manufacturer with a major presence in the flat-screen TV market. Its management expects the geographic expansion of its smartphone sales to fuel growth and profits in the coming years. If it does so, it will be at the expense of Samsung, HTC and Google's own Motorola brand. Matt Revis, Vice President of Dragon Devices at Nuance, points out that the company had its choice of a number of less expensive alternatives to Swype to support touch-based input, including the "free" default keyboard that ships with the Android operating system.
"This is representative of a situation where you have a company that is positioned to grow globally and looking for an innovation partner to make it a category leader," Revis explained. "They are working with Nuance."
Indeed, it is a signal event for Nuance and Swype, which is already available for free download from Google Play. While Nuance would not provide revenue estimates for the licensing agreement, the impact can be expected to be significant, given TCL's ambitious growth expectations in the coming year. A virtuous circle has been established whereby an aggressive manufacturer recognizes that innovation will be key to growth and has recognized the need to cement a relationship with a firm that has been steadily investing in improving the technologies that support touch-based and multimodal input - both through internal development and acquisition.